patrick.net

Come on ya'll go get your Boomer on, go see "Stoned" the riveting Biopic of debauched 1960s rock icon, Brian Jones, the charismatic guitarist who founded the Rolling Stones but was fired in 1969 and found dead at the bottom of his swimming pool a few weeks later. A travesty of the first order, to think of the orgies and drug binges this fine young boomer missed out on just saddens the heart.

I noticed this when I went to Hiroshima too. I asked a bunch of my Japanese friends when I was in Japan if they had ever heard of Pearl Harbor, and none of them knew what I was talking about.

They should know better now especially if they like Ben Affleck. :mrgreen:

I have only been to Nagasaki. Traces of the past can still be seen. That said, nuclear weapons kept us relatively peaceful for more than 60 years now.

It is interesting that in Japan the bombing of Pearl Harbor and the Rape of Nanking are swept under the carpet while in Germany Holocost denial or anti-Semitic statements can send you to jail.

I heard that in Austria you can say that what Hitler did was good but you cannot say that he did not do it. Is this true?

In general I think they’re a gracious people.

I do think they are an honorable people. Anyway, they did bring us sushi.

And we've come full circle...back to the California Roll!

And we’ve come full circle…back to the California Roll!

But the Japanese also invented horrible things, like imitation crab!

Did they invent chia pets?

Did they invent chia pets?

Huh?

But radiation levels are now higher in the earth’s atmosphere.

Source: Law & Order: Criminal Intent—that is how one can date a painting or see if it is a good fake post-1945.

Isn't this primarily due to the dramatic rise in coal combustion post WWII?

I heard that in Austria you can say that what Hitler did was good but you cannot say that he did not do it. Is this true?

The Nazi party and any related political activity are illegal in both Austria and Germany. Holocaust denial is specifically illegal in Austria; I'm not sure about Germany, probably in some form. It's rarely enforced unless it is an exceptional circumstance involving some popular or influential persona.

Austria is also the source of such lovely folks as Joerg Haider http://www.adl.org/backgrounders/joerg_haider.asp A guy who has made an art of pushing the very edge of nazi-like ultra-right nationalism. He was forced from official power in Austria due to EU pressures but is still enormously influential in Salzburg and Carinthia, and is even popular in Vienna.

At least in the US similar ultra-right groups are mostly marginalized. In much of Europe they are suprisingly popular and rapidly growing in most western countries outside of the UK; a fact not advertised by the current European leadership.

Carbon 12 (6 neutrons, 6 protons) 98.8%
Carbon 13 (7 neutrons, 6 protons) 1.1%
Carbon 14 (8 neutrons, 6 protons) trace formed when nitrogen 14 is hit by cosmic rays in the atmosphere

The ratio of C13 to C12 is often used to describe carbon pathways through ecosystems. It is also useful because petroleum is richer in C12 than C13 and so ratios are changing due to the influx of CO2 from burning of fossil fuels

Atmospheric atomic testing produced a huge amount of C14 and caused a spike in C14 levels in the atmosphere and consequently in vegetation, our tissues, the ocean, etc. There was a distinct cut-off of atmospheric testing in the early 1960's and so we have a really nice "tracer" to track such things as dissolved inorganic carbon in the ocean (think thermohaline circulation-- though CFC's are better for this).

So--
coal combustion-- fiddling with the C13/C12 ratio's
atmospheric nukes-- fiddling with the C14 quantities

now, back to my hobby of hoping for a real estate crash...
My old un-used realtor that I once had a high opinion of has been re-listing his house almost every two weeks since December. He just re-listed it for 30k higher a few days ago. Nothing in that neighborhood is going for that high. I think he's losing it.

I love this forum. Thanks for the clarification Sassy. Your realtor(tm) is exhibiting a classic case of MLS-monkey-business syndrome.

I know that in INDIA high paying computer JOBS pay more than some positions in US (75K versus 55K)

My friend in India makes $160K a year total compensation, salary, espp, 401K, bonus and has 150K in the bank.

True, but you need to compare jobs at the same level of talent and experience.

Or we could just let you tell us what it is since you are a pillar of knowledge in all matters.

I would be wary of claiming materials or land or labor alone drive the price of houses. And the price of creating the houses is just as important as the demand to buy those houses as many on this blog assert.

Yeah, sorry, my remark was a little too summarised. The point I'm making is that the bubble is pretty well exclusively due to land price inflation/speculation. Remember that the same Californian bungalow built in 1930 has gone up and up in price, almost regardless of the maintenance performed on it. Same old house. Valuers always separate out land value from building asset value. Land value has gone up, I dunno, 3x compared to construction value, despite temporal ups and downs in building materials and labour costs. I argue that technological advances have made it cheaper, quicker and easier to build a house than ever before, as you would expect.

Further, new housing as a proportion of all housing sold in a period is quite low. It all goes up equally with 'market rates' is the usual pattern.

If you can point to increases in materials and labour in all of the dozens of countries experiencing a housing boom right now, that would be interesting. (Apart from inflationary costs in labour forced so that building tradesman can afford to buy their own inflated house. Housing inflation eventually will flow on into everything inflation.) Especially given that the boom has much more to do with:

- liberalised credit products from lenders, prepared to lend much more to higher risks, based on their revised assessments of risk of loss to themselves
- historically low interest rates for long periods, due to 9/11, stock market crashes, slow economy, etc.
- increased activity of spruikers encouraging people to buy investment properties by gouging the next guy for a safe and secure retirement and to 'get rich quick' and 'be a property millionaire'
- new perceptions by investors (being just about everyone) that residential housing is a safe and guaranteed 'asset investment class' for retirement purposes, with no attempts by govts to limit this activity

It's a ratchet effect, or 'sticky' price-fixing effect.

Gaurav Agarwal of IIM-B’s Class of 2006 bagged the highest job offer from Barclays Capital, London, during final placements. His salary: $193,000

hmm, that's about £100,000 p.a. That would be possible in London for an absolutely exceptional graduate who impressed his employer heavily with his knowledge, leadership ability and future prospects with the organisation. Which would be expected from the absolute top graduands. That position would almost definitely be in London, which pays finance workers quite well. Finance and other services became the lifeblood of England, once they gave up colonialism as a way of getting loot... ; )

Why real estate commissions will fall
An industry insider itemizes the factors that will soon drive down brokerage costs.

Interestingly, there are large differences in the total cost of a property transfer between countries for purely parochial reasons. There's an article in The Economist comparing a number of countries I could dig out. e.g. in Australia it's about 7%, in the US 12%. Note that high transfer costs act as a brake on inflation as a natural 'barrier to entry'. You don't want to do it too often.

Note that RE agents in Oz only make about 2-3% commission, and mortgage brokers only make about 0.7% commission on each sale, compared to more like 5% for each in US. You can see where the 5% difference between Oz and US is going straight away, not counting differences in property transfer taxes...

Well, well, well...the condo that was priced "low" in my building is no longer sale pending. Financing fall through? Muwahahahahaha...bet mister second condo feels pretty dumb relisting at $10k HIGHER since mister first condo is back on the market. He was already listed $20k higher than the first condo - thought he would up the ante another $10k. I love it. Burn baby, burn.

Muwahahahahaha…bet mister second condo feels pretty dumb relisting at $10k HIGHER since mister first condo is back on the market. He was already listed $20k higher than the first condo - thought he would up the ante another $10k. I love it.

Perhaps it will go pending, just to fall through later and then be relisted yet 30K higher.

Gotta love it. :)

Debt = Wealth

There's a big disconnect between the cost of living here (S.J.) and the typical household income able to pay for the current house prices.

I see only two explanations: either folks are "well capitalized", ie, the very rich from places like Hong Kong, Singapore, Bombay. Essentially, their household income is just a consequence of their immigration ticket, "the job". But they were already rich without the job, - the elites from their country;

or the other group, folks who are very stressed, a paycheck away from disaster. Folks who are very stressed, if they are survivors and it in for the long haul, may eventually have a decent standard of living, if incomes rise, and housing prices rise, and they continue to service their mortgages and property taxes all the while. But it is stressful, and there's always a temptation to "opt out"to a cheaper region.

The point I’m making is that the bubble is pretty well exclusively due to land price inflation/speculation. Remember that the same Californian bungalow built in 1930 has gone up and up in price, almost regardless of the maintenance performed on it. Same old house. Valuers always separate out land value from building asset value. Land value has gone up, I dunno, 3x compared to construction value, despite temporal ups and downs in building materials and labour costs.

Indeed. Shiller basically proved this in his chapter on the housing bubble. While some construction related specialties and raw materials have gotten more expensive (thanks in part to bubble-related demand), these costs tend historically to fluctuate within a relatively narrow band around overall inflation. The recent doubling or tripling of RE values has little-or-nothing to do with the costs of construction or raw materials. When we talk about a "housing bubble", we're primarily talking about a LAND bubble.

When we talk about a “housing bubble”, we’re primarily talking about a LAND bubble.

What about the MILLION dollar Malibu mobile home? What land?

Essentially, their household income is just a consequence of their immigration ticket, “the job”. But they were already rich without the job, - the elites from their country;

This is one attempted explanation of why people can buy expensive real estate with seemingly inadequate income. However, this THEORY is turned around and is used as the CAUSE of the housing boom.

In the end, it is a bubble no matter how they spin it.

(The same "very rich" people in Hong Kong or Japan were somehow unable to prevent their own housing bubbles from bursting)

There’s a big disconnect between the cost of living here (S.J.) and the typical household income able to pay for the current house prices.

The cost of living in SJ is not high at all. Rent is actually very cheap among high-tech employment centers.

But no, housing bulls like to belive that renting is not an option, because people LIKE to buy regardless of price. OWNING in a transitional neighborhood in East San Jose is much better than RENTING a 4br house in Palo Alto. Because people WANT to own.

HA HA

" - thought he would up the ante another $10k."

That would have been understandable, since in the time it took for escrow to fall through, the property certainly must have appreciated at least 10K.

Peter P you have tact.
"transitional neighborhood" = transition from cheap $hithole to expensive $hithole???

It’s a ratchet effect, or ’sticky’ price-fixing effect.

This same effect is why the correction will be less-than-satisfying for many of us awaiting a good timing opportunity to buy in. When price-fixed sticky assets start to deflate, they do so in an uneven, unpredictable, and sometimes counter-intuitive manner. Although the overall trend will be downward, expect to see lots of annoying little up-and-down perturbations as the air comes out of the bubble.

Fundamentals will kill the overpriced Bay Area housing market.

Plain and simple.

You cannot defy the laws of financial physics forever. Sooner or later reality will exert itself.

Perhaps the best that we can hope for is not a return to sanity, simply because it probably never existed in Silicon Valley.

I look forward to a climate of less mass psychosis, with a decrease in--or
perhaps attenuation of--neurosis here and there.

I think we could all live with that.

So is it a demand for a $hitbox-by-the-sea?

Somebody just paid $3.5 million for a narrow hole between 2 buildings at Bondi in Sydney... http://news.ninemsn.com.au/article.aspx?id=88714

I guess it's:
1) demand for desirable locations, such as water views, better neighbourhoods, etc
2) entire cities and areas where the best jobs are, e.g. LA, Sydney
3) new ethnic groups may make a difference, e.g. Sydney doubled partly due to influx of capital from Hong Kong, Melbourne stayed flat, but then caught up probably via a fan-out effect later
4) sometimes just local, possibly even irrational beliefs in property as an investment vehicle, which varies from area to area - N. America has enormous differences in prices over its larger cities, say over 1 million people - I wonder if it just doesn't occur to people in some areas to exploit property in that way, apart from recession effects, such as in detroit, etc...

I just read my last post again. Sounds like I'm losing my marbles.

I think the only thing I'm trying to say is that this sh-t is coming to an end soon.

Thank god.

Nice to see all the good posts.

Regarding Peter P's remarks:

first, I hope you are right that Asian elites will not be able to prop up house prices in the bubble here, like they couldn't prop up the prices in Tokyo and Shanghai. We need a housing crash here. But compared to places like those, this is still a cheap place, and our crowded neighborhoods are the "wide open spaces" compared to the canyons of Asia's crowded cities. Maybe, some real estate crashes in places like Shanghai can pull some hot money out of our market. I suppose that a drop in U.S. demand for Asian-built junk and gadgets could lead to such corrections in Asia. But these are macroeconomic stuffs that are as confusing to me as they are facscinating. We'll see.

Now, regarding your remark that this is not an expensive place, well afraid not. You are comparing San Jose to other high tech employment centers. Would that be high tech employment centers in the US, or high tech employment centers in Asia?

Now, in comparison to other urban places in the US, yes the prices for electronic gadgets and crap and imported clothes and mass produced "groceries" are nearly the same as somewhere like Tulsa. But hey, a of lot stuff costs a lot more here: medical care, "good" childcare, preschool tuition, the going rates for vehicle maintenance, gasoline. Ever try to buy a car here in San Jose? No matter who close you get to the red-state price, that very high sales tax makes the car cost a whole lot more. Probably, it is very much linked to the high cost of housing here. And yes, rent is high here, compared to the red states people are leaving for. Maybe not high compared to your "tech centers", but that's only a small part of the USA.

But compared to places like those, this is still a cheap place, and our crowded neighborhoods are the “wide open spaces” compared to the canyons of Asia’s crowded cities.

It is not exactly easy to immigrate here legally. New Zealand and British Columbia have much better environments for much less than here. And they are relatively easy to migrate.

Visit those places and you will wonder why we are overpaying for this crappy place called silly valley.

Would that be high tech employment centers in the US, or high tech employment centers in Asia?

Adjusted for income, rent is quite cheap here. A family with two income can spend less than 1/8 of their gross income on rent. This means that a single-income family can still have a reasonable 1/4 rent-to-income ratio.

But hey, a of lot stuff costs a lot more here: medical care, “good” childcare, preschool tuition, the going rates for vehicle maintenance, gasoline.

Medical care is expensive everywhere in the US. Childchare is not necessary if one parent stays home. The loss of one income is not as dramatic as one would suspect. You get a lower tax bracket, more deductions, and lower employment related expenses.

Ever try to buy a car here in San Jose? No matter who close you get to the red-state price, that very high sales tax makes the car cost a whole lot more.

Ever try to buy a car in Asia? :) I heard that some places charge more than 100% tax on vehicle purchases.

Interested parties will always try to explain booms with reasons that suggest sustainability. Trust your nose. If it does not smell right, it is probably rotten.

I just check the numbers in viewfromsiliconvalley.com, it seems that San Mateo county is going down while Santa Clara county is holding up. My explanation: Santa Clara county has a higher sheeple-to-population ratio. This is intuitive.

I come down in the middle of the Silicon Valley comparatives. I am generally optimistic and bullish on SV *over the long term*. I do think SV is sustainable *given a significant RE correction*. In fact, I don't think that a correction is avoidable, nor should it be avoided even if possible. It is the very desctruction that such a correction causes that will breed the next wave of creation. Creative destruction. I have an entire discussion focused on SV at http://randolfe.typepad.com/randolfe/2006/03/is_silicon_vall.html Of course, a lot could happen to end SV's run, and IMO many are doing their best to destroy this place.

Interested parties will always try to explain booms with reasons that suggest sustainability.

Bubble-booms can only hold up so long as their supporting psychology remains unshaken. I hear a lot of rumbling lately; could be psychologies shaking.

I was listening to some realtors(tm) talking today. Even THEY were talking about the upcoming correction. This is the first time I've heard THEM admit that there will, in fact, be some kind of correction. Of course this discussion was taking place in a 1400 sq ft chitbox in a questionable part of LA for sale at $879,000. So, yes, rumblings.

Creative destruction.

Exactly. I do believe in this.

Bubble-booms can only hold up so long as their supporting psychology remains unshaken.

In fact, bubble booms and supportive psychology form the reflexive feedback loop. Bubble bust and fear will form another feedback loop. And it will be ugly.

So, yes, rumblings.

Mumbling for now. :)

The guy who raised the price $10k on the unit in my building got exactly ONE person today at his open house (this unit is right down the hall from me). Heh. But I'm sure it was just the bad weather ;)